DENVER – Colorado will expand its Medicaid program to cover 160,000 low-income adults, Gov. John Hickenlooper announced Thursday.

The expansion originally was mandated in President Barack Obama’s Affordable Care Act, but the Supreme Court partially overturned the law last summer and left it up to the states.

Hickenlooper said his staff worked to find ways to save $280 million in 10 years so Colorado taxpayer dollars won’t be needed to pay for the increased coverage.

“At the same time you’re expanding coverage, you can also improve outcomes, and if you really focus on it and push, you can also control costs,” Hickenlooper said.

It will be the second major expansion in Medicaid eligibility in four years in Colorado. In 2009, the state adopted a fee on hospitals that was used to draw matching money from the federal government in order to expand coverage for children, pregnant women and some adults.

Kids who were covered under the previous expansion are doing better in school, and adults are more likely to get preventive care and treat diseases before they become serious and costly, said Sue Birch, director of the state Department of Health Care Policy and Financing.

“Simply put, healthy people cost us a lot less money,” Birch said.

Hickenlooper’s expansion will cover people who make up to 133 percent of the federal poverty level. That’s $14,856 for a single person or $30,657 for a family of four. Colorado already covers children and some adults at this income level, and the new expansion will reach mainly adults.

The new people will be eligible for coverage starting in 2014. The federal government will cover 100 percent of the expansion’s cost through 2016, but then its reimbursement will taper down and, by 2020, Colorado will have to pick up 10 percent of the cost.

Medicaid costs are the fastest-growing part of the general fund and threaten to squeeze out other programs such as colleges and the justice system in the coming years.

Sen. Ellen Roberts, R-Durango, thinks it’s a bad idea to rely on federal promises for such an expensive program.

“We haven’t made the current caseload sustainable,” Roberts said.

Congress is looking for ways to cut costs, but no one seems to be saying what the cuts might be, Roberts said. However, she has heard that reimbursement to states for hospital fees like Colorado’s is high on the list.

“To me, all of that spells trouble for Colorado in taking that extra step (and expanding coverage),” Roberts said.

Hickenlooper promised that no money from the taxpayer-funded general fund will be used for the expansion. Instead, Colorado can save money by improving its technology, reducing duplicative care, rooting out fraud and paying doctors for outcomes instead of the volume of procedures they perform, according to information from Hickenlooper’s office.

Medical and patients lobby groups were delighted at the news. The Colorado Hospital Association, the Colorado Medical Society and the Colorado Coalition for the Medically Underserved all support the expansion.

“Lives will be saved, lives will be improved, and we will be able to see that in many ways,” said Gretchen Hammer, director of the Colorado Coalition for the Medically Underserved.